Latin America: Medical Equipment Opportunities

Specialty medical devices see growth rates of over 20 percent in 2015.

BY GUILLAUME CORPART

In 2015, imports of capital equipment for the medical field contracted slightly from $5.2 billion to $5.1 billion year-over-year (YoY). Despite stagnant numbers, there are still a number of profitable product classes in response to the region’s epidemiological transition, where ageing populations and a pervasive obesity epidemic have left countries facing a high prevalence of non-communicable diseases (NCDs). Deaths stemming from chronic diseases are projected to reach 84 percent by 2030, this is—and will continue to be—the primary driver for capital equipment imports in coming years.

Mexico, Brazil, Argentina and Colombia account for over 80 percent of the region’s import and sales of capital equipment. All of these countries have made efforts to revitalize their healthcare systems that present opportunities for manufacturers, distributors and integrators alike.

In spite of the worsening economic downturn, the Brazilian government allocated funds towards teaching hospitals and improving specialty services in 2015; Mexico has initiated plans to streamline their medical imports as well as proposed initiatives to migrate systems to electronic medical records (EMRs); and Argentina has initiated their National CyberHealth Plan to expand patient outreach.

Manufacturers, distributors and integrators can expect sustained interest in capital goods, led by diagnostic and patient monitoring equipment. Given the continued need for capital equipment as well as the financial constraints of payers, second-generation and certified refurbished equipment may gain traction.

In Mexico, infusion pumps rank as the dominant product class for the country’s imports, displaying a 7 percent YoY increase. Breath-enhancing machines (such as ventilators and nebulizers) as well as defibrillators experienced the highest growth, with a 20 percent YoY increase (to reach a market value of $98 million), and a 23 percent YoY increase (to reach a market value of $9.4 million), respectively. Other product classes showing significant growth are blood pressure monitors, with a 2 percent YoY increase to reach a market value of $11.6 million. Such gains are not exclusive to Mexico. Brazil’s highest-growth product class, electrocardiograph machines, increased 28 percent to reach $4.0 million. The country also saw growth of 6 percent in ultrasound machines, reaching a market value of $107 million. Meanwhile, Colombia displayed a 5 percent YoY growth in MRI machines, reaching $15 million by year-end 2015.

Suppliers should heed the cardiorespiratory-centric nature of Latin America’s imported capital equipment; such focus is not coincidental. Currently, Mexico, Venezuela and Argentina are among the most obese countries in the world; bleak overweight rates in Brazil, Colombia, and other countries foreshadow the same trend elsewhere in the region.

Simultaneously, the potentially fatal conditions that go hand in hand with the obesity epidemic and an ageing population (e.g., diabetes, cardiovascular diseases, blood vessel blockage) are expected to continue rising. Hence the significant potential for the diagnostic and treatment capabilities of infusion pumps, defibrillators, MRIs, electrocardiographs, blood pressure monitors, and ultrasound machines, which address the acute and chronic symptoms of these diseases and their associated risk factors. Suppliers should expect resilient growth in products aimed towards insulin management, hypertension, atherosclerosis, embolism/thrombus formation, and decreased pulmonary function.

Given gradual ageing of the population, the spread of chronic diseases, and forecasts indicating region-wide growth in healthcare spending of 4.8 percent per year through 2018, the demand for these product classes will persist in the near future. Additional opportunities exist in aligning portable patient monitoring devices with government awareness and education campaigns. Existing government programs could use these devices to further public health objectives. Such is the case of Mexico’s National Strategy for Prevention for Control of Overweight, Obesity and Diabetes and Brazil’s School Education Program, which also encourage awareness and lifestyle changes. There is a clear regional trend to embrace products made “simple and convenient”, with portability features and home use in mind, particularly if these are able to strengthen the patient-doctor relationship.

MOBILE TECHNOLOGY

Technology penetration in Latin America has progressed at break-neck speed. Internet and smartphone usage rates are now on par with North America, Europe, and Southeast Asia. Already home to over 155 million smartphone users in 2015, the region is expected to maintain growth rates of over 20 percent per year in the near future. By 2019, it is estimated that 42 percent of the population will possess a smartphone device, and the majority will have Internet access.

Successful technologies will soon permeate daily life to promote simplicity and convenience. These benefits of technology are desperately needed in the healthcare sector, where the ageing population, rise in obesity, and increase in chronic diseases have accelerated demand for expensive, sophisticated and long-term treatments. The need is all the more acute as public health sector resources are severely strained.

Two target demographics stand out for the adoption of effective healthcare technologies: the “technology converts” and the “digital natives,” who between them are forecasted to represent 75 percent of Latin America’s population by 2020.

As the population ages, more people are subject to the chronic diseases, such as cancers and arthritis, where complications can arise and require multidisciplinary care. These are usually taxing on the healthcare systems, and the patients themselves. Ageing persons will benefit from diagnostic and monitoring equipment promoting remote (or home) healthcare, which will allow for the management of chronic diseases at a distance. The home healthcare market is expected to grow by 8.6 percent annually and will reach a value of $17.5 billion by 2020. The services and products within the market (e.g., blood pressure and blood glucose monitors, hospice care, therapy) will bring services usually administered at a doctor’s office to patients directly, therefore increasing convenience for all parties. Anybody interested in maintaining a closer watch on their health in order to facilitate prevention and promote early detection will have the means and the tools to do so.

Countries with concentrated use of mobile technologies are the most attractive target markets. Argentina, Brazil, Chile, Colombia, Mexico, and Peru account for approximately 84 percent of all smartphone users region-wide, 1 making them ripe for adoption of mHealth software solutions.

• Wearable devices (“wearables”) such as fit-bands, smart watches and augmented reality glasses are “gadgety” elements that will help bring population health management to the everyday lives of consumers. Surveys show a preference for using these devices to improve health by eating and exercising more smartly, and tracking medical information.

Though market studies suggest Latin America is not yet ready for wearable devices, the region is forecasted to follow in the footsteps of more developed market, with alluring growth prospects of up to 41 percent annually through 2018.

mHealth apps – healthcare and medical smartphone applications for patients and healthcare professionals are the most promising markets in Latin America. Applications dealing with diabetes management and blood pressure & ECG management are expected to be the fastest growing sub-segments. The global mHealth solutions market is expected to reach $59 billion by 2020, growing 33 percent annually, and Brazil and Mexico are expected to offer the largest opportunities region- wide.

Wirelessly connected devices such as blood pressure cuffs and infusion pumps are the next frontier. Their attractiveness is their ability to effortlessly collect data, present it to patients and transmit it to physicians. Automation and ease of use are key attributes in such devices, which are mainly designed for the elderly and people with diabetes.

Each of these markets will promote the adoption of a more holistic approach to healthcare, which will eventually lead to an industry- wide shift away from routine medical checkups to data-driven, “as needed” appointments. People will be able to monitor their health automatically and manage their data and health-related decisions whenever they want. This represents a genuine paradigm shift in healthcare, which will pave the way towards leaner, connected and personalized health systems.

Guillaume Corpart is the Managing Director of Global Health Intelligence and a veteran of market intelligence and strategy consulting in emerging markets. gc@globalhealthintelligence.com |www.globalhealthintelligence.com